Demystifying Health Reform Legislation

The health reform legislation is likely to affect all mental health professionals throughout their lives, both as consumers and as practitioners of health care services.

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In March 2010, President Obama signed into law the most sweeping health care reform legislation in the nation’s history. Those laws, entitled the “Patient Protection and Affordable Care Act,” Public Law 111-148, and the “Health Care and Education Reconciliation Act,” H.R. 4872, will be referred to collectively as PPACA, or the health reform legislation. This article is to provide you with an update on the status of implementation, the public’s views with respect to the legislation, and the likely future of implementation.

The health reform legislation is likely to affect all mental health professionals throughout their lives, both as consumers and as practitioners of health care services. Many provisions of the new legislation remain to be implemented, and psychiatrists and psychoanalysts have been, and should continue to be, involved in shaping that implementation.

A brief overview

Generally, the health reform legislation provides for the following, implemented from 2010 through 2019:

• Prohibits health insurers from excluding enrollees because of a preexisting condition; prohibits insurers from rescinding coverage other than for fraud; requires insurers to renew insurance coverage; prohibits insurers from discriminating on the basis of health status, medical history, or genetic information; requires insurers to accept all employers or individuals in states that apply for coverage; and prohibits insurers from imposing lifetime or annual limits on payments1

• Requires insurers to pay a rebate to enrollees to the extent that payments for health care services are less than 80% of collected premiums in the small-group and individual market and 85% of collected premiums in the large-group market2

• Reduces the number of individuals without health insurance by 32 million to 34 million by adding 24 million who would obtain health insurance through state health insurance exchanges and 16 million who would obtain health insurance through Medicaid and the Children’s Health Insurance Program (CHIP)3(p9),4(p3)

• Requires insurers to provide an “essential benefits” package that would have to include coverage for “mental health and substance use disorder services, including behavioral health treatment”5

• Requires insurers to provide “parity” in mental health coverage.6

• Reduces the projected growth of Medicare by $577 billion4(p2)

• Increases the federal funding match for new Medicaid patients to 99% for 3 years, declining to 93% by the sixth year4(p4)

• Requires insurers to allow dependent children to remain on their parents’ health insurance until age 264(p7)

As of the end of the year, the public was roughly evenly divided with respect to whether it had a favorable or unfavorable opinion of the health reform legislation.

• Approximately 42% of Americans had favorable views of the health reform legislation, while 41% had unfavorable views.7(p1)

• The number of people withholding their opinion on the legislation has increased to 18%.7(p1)

• Three in 10 say they are angry about health reform, but 81% of those say their anger is at Washington in general rather than any specific provision of the reform legislation.7(p1)

• Three in 10 say they are enthusiastic about the law’s passage.7(p1)

• What should the new Congress do about the health reform legislation? One in 5 wants to leave the law as it is, 1 in 5 wants to expand the law, 1 in 4 wants to repeal parts of the law and keep other parts, and 1 in 4 wants to repeal the law in its entirely.7(p2)

• What is the early impact of the law on individuals? 32% expect their family will be better off, 33% expect their family will be worse off, and 28% do not anticipate any change.7(p3)

• Americans continue to have trouble paying for health care: 1 in 4 Americans says his or her household had trouble paying medical bills over the past year, 36% of those living in households with annual incomes of less than $40,000 and 48% of the uninsured had problems paying their medical bills over the past year, and 66% of low-income Americans and 85% of the uninsured have put off some sort of medical care because of cost.7(p5)

The need for health reform

In December 2010, the Bipartisan Deficit Reduction Commission issued a report containing the following conclusions:

• Our nation is on an unsustainable fiscal path. Spending is rising and revenues are falling short, requiring the government to borrow huge sums each year to make up the difference. We face staggering deficits. In 2010, federal spending was nearly 24% of the gross domestic product (GDP), the value of all goods in the economy. Only during World War II was federal spending a larger part of the economy.8(p8)

• Over the long run, as the baby boomers retire and health care costs continue to grow, the situation will become far worse. By 2025, revenue will be able to finance only interest payments for Medicare, Medicaid, and Social Security. Every other federal government activity—from national defense and homeland security to transportation and energy—will have to be paid for with borrowed money.8(p9)

• Federal health care spending represents our single largest fiscal challenge over the long run.8(p31)

The report includes specific recommendations to reduce health care spending between now and 2020:

• Reduce Medicare payments to physicians (–$26 billion)

• Reform or repeal the Community Living Assistance Services and Support (CLASS) Act (2$76 billion)

• Pilot premium support through the Federal Employees Health Benefit Program—federal employees would get a fixed subsidy that would grow by no more than GDP plus 1% each year, to purchase insurance (–$18 billion)

Congress. On January 5, the 112th Congress convened with the House in Republican control for the first time in 4 years and the Senate in Democratic control.9 The change in control of the House from Democratic control to Republican control appears to have been based principally on public dissatisfaction with the status of the economy: “The economy was by far the most crucial issue. Nearly 9 in 10 said they were worried about the direction of the economy in the coming year, and a majority said the country was seriously on the wrong track. Those voters chose Republicans by large margins. About a quarter of voters said health care or the war in Afghanistan was the biggest concerns facing the country, and majorities of them favored Democrats. . . .”10 House Majority Leader Eric Cantor (R-VA) introduced the “Repealing the Job-Killing Health Care Law Act” (H.R. 2) on that date, and it has 171 cosponsors. The bill would repeal the health reform legislation in its entirety. It was scheduled for a vote in the House on January 12, but that vote was postponed indefinitely because of the shooting of Representative Giffords (D-AZ) and others on January 8.

On January 20, the House voted 245 to 189, generally along party lines, to approve H.R. 2 repealing the health reform legislation. On February 2, the Senate voted 51 to 47, again along party lines, to not adopt a bill repealing the health reform legislation.

On January 6, 2011, the nonpartisan Congressional Budget Office issued a letter to new Speaker of the House John Boehner (R-OH) providing a preliminary estimate of the effect of repealing the health reform legislation:

• It would increase federal deficits by “in the vicinity of $230 billion” between 2012 and 2021.

• It would increase federal deficits “in the decade after 2019 by an amount that is in a broad range around one-half percent of GDP.”

• It would reduce the number of people who would have health insurance in 2019 by 32 million—“approximately 24 million people who would otherwise purchase their own coverage through insurance exchanges would not do so, and Medicaid and the Children’s Health Insurance Program would have roughly 16 million fewer enrollees.”

• “Although premiums in the individual market would be lower, on average, under H.R. 2 than under the current law, many people would end up paying more for health insurance—because under current law, the majority of enrollees purchasing coverage in that market would receive subsidies via the insurance exchanges, and H.R. 2 would eliminate those subsidies.”

• “Premiums for employment-based coverage obtained through large employers would be slightly higher under H.R. 2 than under current law . . . premiums for employment-based coverage obtained through small employers might be slightly higher or slightly lower. . . .”13

The administration. The Obama administration appears to be committed to implementing as many of the health reform measures as possible in the next 2 years in the belief that measures that are already implemented will be difficult to repeal.

The courts. There are 24 lawsuits pending in various courts across the country seeking to invalidate some aspect of the health reform legislation.14 The allegations in these cases center around whether Congress has the authority under the “Commerce Clause” of the Constitution to require individuals to purchase health insurance or pay a tax under the individual mandate in the health reform legislation.15 Article 1, section 8 of the Constitution authorizes Congress “to regulate Commerce . . . among the several states. . . .”

Four of these lawsuits have been decided—2 have upheld the constitutionality of the health reform law and 2 have found it unconstitutional. The federal district courts in Thomas More Law Center, et al v Barack Hussein Obama16 and Liberty University, Inc. et al v Timothy Geithner, et al17 both found that decisions by individuals to not purchase health insurance affect commerce among other citizens because the cost of their health care is then borne by those other citizens. The court in Commonwealth of Virginia, et al v Sebelius18 found that neither the Supreme Court nor any Circuit Court has ever found that the Commerce Clause authorizes Congress to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market. The court in State of Florida v US Department of Health and Human Services (HHS)19 found that the individual mandate is not authorized under the Commerce Clause and invalidated the entire health reform legislation on the grounds that the unconstitutional provision was not severable from the rest of the legislation. That suit involved 26 states as plaintiffs because the status of the health reform legislation in those states is uncertain. This issue will likely have to be resolved by the Supreme Court.

Status of health reform provisions

The following is a list showing the sequence in which health reform measures will go into effect:

• High-risk insurance pools for individuals without insurance for 6 months and who have a preexisting condition (effective July 1, 2010, through January 1, 2014); more than 8000 people have enrolled20,21

• Federal reinsurance for early retirees age 55 or older but not eligible for Medicare (effective July 1, 2010, through January 1, 2014)22

• Elimination of lifetime limits on the dollar value of benefits and no “unreasonable” annual limits23

• No rescission of health plan or coverage other than in cases of fraud or intentional misrepresentation of a material fact (effective September 2010)24

• Health plans must provide coverage for and not impose cost sharing for preventive health services approved by the US Preventive Services Task Force (effective for private health plans in September 2010 and for Medicare January 1, 2011)25

• A plan that provides dependent coverage of children must make the coverage available to unmarried children until they turn 26 years of age (effective September 2010)26

• Health plans, including “grandfathered” plans cannot deny coverage to children on the basis of a preexisting condition (effective September 2010, applies to all persons in 2014)27

• HHS in conjunction with the states shall review health insurance premium increases to ensure that they are not “unreasonable” (for plan years beginning in 2010)28

• In 2010, Medicare beneficiaries will receive a $250 rebate on drugs that they pay for because they hit the “donut hole” in coverage under Part D of Medicare and will receive a 50% discount on such drugs beginning in 201129

• No exclusion of coverage on the basis of a preexisting condition (items 9-16 apply to health plans beginning on or after January 1, 2014)30

• Rating (price) of insurance premiums may be based only on whether the plan covers an individual or a family, the geographic rating area (to be established by the states), age (no more than 3 to 1), tobacco use (no more than 1.5 to 1)31

• Guaranteed acceptance of every employer and individual32

• Guaranteed renewability of coverage at the option of the plan sponsor or individual33

• Prohibition of discrimination in eligibility based on health sta-tus or medical history, including “medical condition (including both physical and mental illness)”34

• Prohibition of discrimination in participation against any provider acting within the scope of the provider’s license or certification under state law35

• Insurers must offer coverage that includes the essential benefits package36

• Health plans in existence on the date of enactment do not have to comply with new insurance requirements, and nothing in the Act requires individuals to terminate that coverage37

– Plans in the small-group market may have annual deductibles no higher than $2000 for an individual and $4000 for others; also limits on all cost sharing and premium adjustments39

– Levels of coverage: bronze—coverage equivalent to 60% of full actuarial value of benefits; silver—coverage equivalent to 70% of full actuarial value of benefits; gold—coverage equivalent to 80% of full actuarial value of benefits; platinum—coverage equivalent to 90% of full actuarial value of benefits40

– Mental health parity requirements apply41

• Tax credits for small business (no more than 25 full-time employees) of up to 50% of contributions to cost of health plan42

• Individual mandate: Beginning January 1, 2014, an individual will be liable for a penalty for any month in which the individual (and any dependents) do not have minimum essential health insurance in the amount of 1/12 of an “applicable dollar amount,” which is $95 for 2014, $350 for 2015, and $695 thereafter, increased by the increase in the cost of living. For individuals under the age of 18, the amount is reduced by 50%. There are exceptions for individuals who cannot afford coverage, taxpayers with income below the filing threshold, members of Indian tribes, where coverage gaps are for less than 3 months and for hardships. The maximum penalty for any individual is the lesser of the sum of monthly penalties for a year or 300% of the “applicable dollar amount” for an individual. Minimum essential coverage is coverage under Medicare, Medicaid, CHIP, TRICARE, an employer-sponsored program, plans in the individual market, grandfathered plans, and other plans recognized by the Secretary of HHS. The penalty is payable on the individual’s tax return.43 Any taxpayer who fails to pay the penalty shall not be subject to any criminal prosecution and no lien shall be filed against his or her property.

• Medicaid coverage will be expanded to individuals at 133% of the federal poverty line (adding a projected 18 million individuals to the Medicaid rolls) and Medicaid coverage must include the essential benefits package (including mental health coverage) and mental health parity.46

– Effective January 1, 2014: Federal funding match for “newly eligible individuals” is 100% for 2014, 2015, and 2016; 95% for 2017; 94% for 2018; 93% for 2019; and 90% for 2020 and thereafter.

• Beginning October 1, 2011, under the “Community First Choice Option,” states may amend their Medicaid plans to provide home and community-based attendant services and supports for individuals whose income does not exceed 150% of the poverty level if the individuals require a level of care that but for this program, would be provided in a facility for the mentally retarded or an institution for mental disease. Covered services must be designed to assist the individual in accomplishing activities of daily living, instrumental activities of daily living (meal planning, managing finances, etc), and health-related tasks (those delegated or assigned by a licensed health care professional). The state may elect to also cover the costs (such as rent and transportation costs) necessary to allow an individual to make the transition to the home or community from an institution for mental illness or an intermediate care facility for the mentally retarded. As an incentive to adopt such options, the federal match for funding such programs is increased by 6%.47

• Beginning January 1, 2011, states may amend their Medicaid plans to add coverage for “health homes” for individuals with chronic conditions, which may include “1 serious and persistent mental condition.” These services can be provided by a designated provider, a team of health care professionals operating with such a provider, or a health team that meets the requirements issued by the Secretary of HHS. The federal government will pay 90% of the costs of these programs for 2 years and provide $25 million to the states in planning grants. Nearly any entity can be approved by the state as a designated provider in this program.48

Regulations specific to the practice of psychoanalysis

• A qualified health plan eligible to participate in a health insur-ance exchange “may contract with . . . “a health care provider only if such provider implements such mechanisms to improve health care quality as the Secretary may by regulation require (effective January 1, 2015).”49 The Secretary may establish reasonable exceptions.50

• The Secretary cannot promulgate any regulation that creates any unreasonable barriers to the ability of individuals to obtain appropriate medical care; impedes timely access to health care services; interferes with communications regarding a full range of treatment options between the patient and the provider; restricts the ability of health care providers to provide full disclosure of all relevant information to patients making health care decisions; violates the principles of informed consent and the ethical standards of health care professionals; or limits availability of health care treatment for the full duration of a patient’s medical needs.51

• No individual, company, business, nonprofit entity, or health insurance issuer shall be required to participate in any federal health insurance plan created under the Act or any amendments to it or any such program expanded by the Act or any amendments.52

• A Patient-Centered Outcomes Research Institute is to be established to assist patients, clinicians, purchasers, and policy makers in making informed health decisions. The Secretary can only use the findings and recommendations of the Institute to make coverage determinations under Medicare if such use is “through an iterative and transparent process which includes public comment and considers the effect on subpopulations.”

None of the findings and recommendations of the Institute may be construed as “authorizing the Secretary to deny coverage of items or services under [Medicare] solely on the basis of comparative clinical effectiveness research.53 Funding to be appropriated by Congress is the following: $10 million in fiscal 2010 increasing to $150 million in fiscal 2013 and thereafter.